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Has Gold Finally Bottomed? Mike Maloney Answers This Critical Question

Has the gold price finally bottomed? Mike Maloney is back with another video series that helps to answer this question for you.

Fibonacci numbers have always intrigued me and I’ve put greater faith in using Fibonacci retracement patterns than other technical analytic approaches. If nothing else, I believe the patterns will prove to be self-fulfilling, as technical analysts around the globe take a similar approach to determine if gold has indeed bottomed.

Gold has now retraced roughly 50% of the advance from the 2001 low around $250 to the top around $1,920. That gain was $1,670, which means a pullback of around $835 (from $1,920) should act as solid support and a bottom for the current corrective cycle. If we take the high of $1,920 and subtract $835, we can the 50% Fibonacci retracement of $1,085. And it just to happens that gold put in a bottoming pattern in the $1,060 to $1,085 range during December of last year. It has now exploded higher during the first six weeks of 2016, adding roughly $150.

gold fibonacci retracement 50

We are seeing a large amount of capitulation in the gold market, according to Mike who runs a large bullion dealership. We can infer that a large number of his clients have been selling gold back to him, rather than buying during this dip. This is typical behavior, as most investors end up buying high and selling low. Mike says the odds that gold has bottomed are high and he has been buying during this dip and accumulating gold. We have also been buying recently, both physical bullion and mining stocks in the GSB Portfolio in the past month. Don’t let the bull buck you off its back and remember to buy when there is blood in the streets and everyone else is bearish and selling.

Even if gold does dip one more time below $1,000, Mike believes you will not be able to get physical anywhere near this price. The 61.8% retracement is at $890, which was also roughly the 1980 high. So this level of support should be very strong and result in a huge bounce, if gold does drop into the $850-$890 range. And this would be the absolute low for gold, although Mike believes we have most likely seen the bottom already.

We are in for a continuation of the current deflationary cycle in the short term, but the Keynesians are going to print non-stop until deflation gives way and they spark the fire of inflation. They will overshoot, as they almost always do, and gold prices are going to make new highs.

Gold fundamentals are also very bullish at the current time. Gold demand has been higher than supply for the past several years, yet the price has been dropping. Where does this excess gold come from? Dumb money selling in the West, while smart investors in Asia buy at temporarily discounted prices. Mike says the price has to turn around sometime soon, largely due to these fundamentals.

In addition to accumulating physical gold and silver bullion, we believe this is an excellent time to be scooping up best-in-breed mining stocks on the cheap. They have been offering leverage of 2.5X so far in 2016 and I think this leverage will increases as the gold price continues higher. If you are skeptical of the paper system and keeping your wealth with brokerages, you can periodically convert a portion of your paper profits into physical bullion. In the end, you will end up with much more physical gold and silver than you would have by only purchasing bullion.

We work hard analyzing hundreds of mining companies to find the ones we believe will outperform and generate huge returns during the next few years. We look for high grades, low costs, seasoned management, growing resources, politically stable jurisdictions, ability to finance, and a number other critical factors. Get access to the GSB portfolio, our monthly contrarian newsletter and weekly trade alerts here: https://goldstockbull.com/members/signup.php

Has Gold Finally Bottomed? Most likely, yes. Check out Mike’s website at goldsilver.com

By | 2017-03-23T14:06:14+00:00 February 9th, 2016|Gold & Silver Commentary|

About the Author:

Jason Hamlin is the founder of Gold Stock Bull and has been investing in precious metals for over 20 years. Jason spent nearly a decade in analytics for the world’s largest market research firm, before finding success investing full time. He launched Gold Stock Bull in 2005 and turned his focus from helping fortune 500 companies to helping individual investors. Jason is a student of Austrian economics and a proponent of cryptocurrencies such as bitcoin and ethereum.